Europe is investing hundreds of billions of euros to strengthen industrial competitiveness. Yet one of the continent’s most strategic assets, the rail freight system that supports its manufacturing base, has been steadily losing ground.
Rail freight is the logistical backbone of Europe’s core industries, including automotive, steel, and chemicals. But despite Europe’s political commitment, infrastructure investment, and ambitious climate targets, rail freight — one of the most environmentally friendly modes of transport — struggles to gain share from more carbon-intensive road transport.
Our new research, conducted in partnership with the German Rail Industry Association (VDB), argues that the debate over the future of rail freight has been asking the wrong question. The issue is not whether rail freight has a future: the economy needs it. The real challenge is how to transform the sector to unlock its full potential. By reinventing its operating model, embracing innovation, and improving productivity at scale, rail freight can reignite growth and capture the market opportunity now emerging.
The next wave of rail freight growth depends on execution
Over the past three decades, European rail freight has undergone a profound structural transformation. Liberalization has opened markets to competition, independent operators have become major players, asset-light business models have emerged, fleets have modernized, and substantial investments have improved infrastructure. Intermodal transport has become the sector’s principal growth engine, particularly along Europe’s freight corridors.
At the same time, market conditions have never been more favorable. Nearshoring is reinforcing industrial activity across Central, Eastern and Southern Europe, creating longer and denser freight flows that naturally favor rail. Meanwhile, road freight is facing structural headwinds: persistent driver shortages, congestion, infrastructure constraints, fuel price volatility, and growing decarbonization requirements.
Yet rail is not capturing this opportunity at the pace it should. The reason is straightforward: customer expectations have evolved faster than the rail’s operating model. Today’s supply chains demand reliability, transparency, flexibility, and seamless cross-border execution. Road transport has continuously adapted to these requirements. Rail has made progress, but still needs to close the gap between market expectations and operational performance.
Transforming rail freight for the next generation of supply chains
The hidden engine of future growth is therefore transformation. Rail must significantly improve reliability, transparency, and flexibility, strengthen corridor-based execution, and scale customer-centric operating models to meet the requirements of integrated European supply chains.
This requires coordinated action across the entire rail ecosystem. Railway undertakings must improve operational performance and asset utilization. Leasing companies must enable more capital-efficient and flexible fleet deployment. Manufacturers need to support new asset deployment models and accelerate fleet renewal. Together, these changes can create a more agile, competitive, and customer-oriented rail freight system.
Europe has an opportunity to shift more freight to rail
If the sector succeeds, the upside is significant. Our analysis shows that European rail freight volumes could grow from around 389 billion tonne-kilometers in 2025 to more than 540 billion tonne-kilometers by 2050, increasing rail’s modal share from around 17% today to more than 20%. International freight and intermodal transport will be the primary drivers of this growth, opening opportunities for operators in this industry.
For Europe, this is about far more than transport policy. Rail freight is a strategic enabler of industrial competitiveness, supply chain resilience, and decarbonization. As Europe seeks to rebuild its industrial base, securing and transforming its logistics backbone is no longer optional. It is a prerequisite for long-term economic success.
